Wednesday, February 15, 2017

NGCP allowed higher revenues of P43.8 B

The Energy Regulatory
Commission (ERC) has allowed upward adjustment in the interim maximum allowable
revenue (iMAR) of the National Grid Corporation of the Philippines (NGCP) to
P43.789 billion from what was previously approved at P41.653 billion.

That had been based on
the modified approval given by the industry regulator to its 2016 revenue level
– and was correspondingly reflected as added P0.15 per kilowatt- hour (kWh)
NGCP’s increase in billing to customers, primarily for the Manila Electric
Company (Meralco), this March.

The ERC noted that
“NGCP is authorized to continuously bill its transmission customers using this
adjusted iMAR for the succeeding regulatory years until the Commission’s
issuance of the final determination for the fourth regulatory period.

It similarly emphasized
that “the difference between the provisionally-approved iMAR for 2016 of
R41.653 billion and the approved iMAR shall be collected by NGCP in calendar
year 2017.”

The interim revenue
level of the transmission concessionaire-firm though is still lower than what
it originally applied for at P45.287 billion.

There had also been
adjustment of P7.553 billion that NGCP had petitioned for accounting for cost
recoveries under its second regulatory reset.

The ERC explained that
it adopted “previous methodology similar to the determination of the MAR2003 to
arrive at a base MAR for 2016, but reduced by the adjustments which should only
be recovered during the 3rd regulatory period pertaining to the efficiency
carry-over and under-recoveries.”

The third regulatory
reset period for NGCP lapsed on December 2015, and its fourth reset should have
started January last year.

However, since the
company has yet to secure approval on its fourth rate-setting regulatory
period, it no longer have a MAR to implement, thus, the need for the interim
approval on its revenue base.

“Pending the reset
process, the Commission granted NGCP’s MAR for 2016 that is outside the RTWR
(Rules for Setting Transmission Wheeling Rates) and only an interim approach
for determining the revenue of NGCP,” the ERC order has stipulated.